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Imagine waking up to find your bank balance increased by an extra £9,470 overnight, no strings attached – just a gift. You wouldn’t pass that up, yet thousands – if not millions – of people are doing exactly this by failing to act on tracking down lost or forgotten pension pots. The £9,470 figure is the average amount the Pensions Policy Institute estimates the value of each lost pension to be. This rises to £13,620 among the 55- to 75-year-old cohort.
Since 2018, the total value of lost pension pots in the UK has increased by 60%, or nearly £12billion, to a staggering £31.1billion. But it’s understandable why these pots go AWOL. Most research points to job switching and automatic enrolment as key drivers. Since 2012, employers have been required to enrol eligible staff into workplace pensions and contribute unless the employee opts out.
With the average person changing jobs 11 times, this can lead to 11 separate pension pots, making them difficult to manage and track.
The good news is that it’s easy to trace them once you know how, and most importantly, it’s free. The Government’s online Pension Tracing Service could be a good place to start.
You’ll need either the name of the employer or the pension provider. The tool will then be able to provide contact details so you can get in touch with the provider. Those uncomfortable online can reach the helpline on 0800 731 0175 between 10am and 3pm, Monday to Friday.
People can also use other online tracing services, such as Pension Attention or Gretel. Once you’ve found your pensions, you’ll then be in a far better position to take control of them.
More worrying research by Hargreaves Lansdown recently found six in 10 Brits don’t realise their pension is actually an investment.
Everyone with a pension is investing – whether they know it or not. The great news is that it’s your money, and you can choose how it’s invested. You can even adjust your risk profile if you want to, although professional advice is always recommended. Clare Stinton from Hargreaves Lansdown described this as a “golden opportunity”- especially if you feel your money isn’t working as hard as it could.
When you’re auto-enrolled into a workplace pension, your money usually goes into a default fund. These are designed to be solid, diversified, and relatively low-risk, aiming to suit everyone, from a 22-year-old just starting out to a 50-year-old joining a pension later in life. But that one-size-fits-all approach might not suit your personal goals or timeline.
Thankfully, most pension providers offer alternative funds that could better match your risk appetite or ethical values. As Ms Stinton explains, a higher allocation to shares might increase your chances of better returns, but it also means more market ups and downs.
The key is making sure you’re comfortable with the level of risk, and knowing that investments can fall as well as rise. So, start tracking down your pensions and make sure your money is working as hard as you are.
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DEAL OF THE WEEK
Halfords offers free car checks for all drivers, with or without signing up. Join the Halfords Motoring Club for free and you’ll get a complimentary 10-point car health check, normally priced at £15. It takes about 30 minutes and covers essentials like battery health, tyre pressure and tread, oil level, and screen wash top-up.
Not up for signing up? You can still book a free 5-point check covering battery, lights, wipers, windscreen, and MOT reminder.
There’s no obligation to buy or act on any advice. Checks are available seven days a week at most Halfords stores and garages, just book online or in-store.
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Around 65% of households are still paying the energy price cap rate, despite better deals being available. The latest data shows fixed tariffs are already cheaper than both the current and upcoming price caps, with some costing up to 18% less.
While the energy price cap is set to fall by 7% in July, this only reverses the recent April hike and leaves prices still around 10% higher than last summer. Forecasts for later in the year suggest minimal changes, perhaps a small drop in October, followed by slight rises in January and April of up to 1% and 3% respectively.
Given the uncertainty in global markets and modest predicted movement, fixed deals now offer a strong chance of long-term savings, Money Saving Expert Martin Lewis has recently preached. Yet most people remain on the price cap, effectively overpaying for their gas and electricity.
Switching to a fixed tariff by using a whole-of-market comparison tool could save you hundreds of pounds over the next year, especially if you act before July’s rate change. Jump on Money Saving Expert’s Cheap Energy Club to compare deals.
